In March 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.

The Corporation early adopted ASU No. 2016-09 on July 1, 2016 with an effective date of January 1, 2016, which resulted in a reclassification of $5.9 million from additional paid-in capital to provision for income taxes, representing excess tax benefits previously recognized in additional paid-in capital during the six months ended June 30, 2016. During the three months ended September 30, 2016, the Corporation recognized a benefit of $6.4 million in provision for income taxes for excess tax benefits that occurred in the current quarter. The early adoption favorably impacted basic and diluted EPS by $0.03 and $0.06 per share for the three and nine months ended September 30, 2016, respectively.

Adoption of the standard impacted the Corporation’s previously reported quarterly results as follows:



	Three Months Ended
	June 30, 2016						March 31, 2016
($ In Millions except per share data)	As Reported			As Adjusted			As Reported			As Adjusted
Provision for Income Taxes	$	134.0		$	131.7		$	117.4		$	113.8
Net Income	260.7			263.0			241.8			245.4
Earnings Allocated to Participating Securities	4.7			4.8			4.1			4.1
Net Income Applicable to Common Stock	254.9			257.2			235.9			239.5

Effective Tax Rate	33.9		%	33.4		%	32.7		%	31.7		%

Basic Earnings per Share	$	1.10		$	1.11		$	1.01		$	1.03
Diluted Earnings per Share	1.09			1.10			1.01			1.03
Diluted Weighted Average Shares Outstanding (000s)	229,197			229,280			229,980			229,798

Additional Paid-In Capital	1,040.2			1,037.9			1,022.1			1,018.5
Retained Earnings	8,566.3			8,568.6			8,394.8			8,398.4

For the nine months ended September 30, 2016, the Corporation reclassified excess tax benefits from other financing activities to other operating activities and for the nine months ended September 30, 2016 and 2015, the Corporation classified taxes paid related to net share settlement of equity awards in financing activities in the consolidated statements of cash flows, respectively.

The Corporation had no previously unrecognized excess tax benefits; therefore, there was no impact to the consolidated financial statements as it related to the elimination of the requirement that excess tax benefits be realized before recognition.

The Corporation elected to retain its existing accounting policy election regarding award forfeitures.

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). ASU 2014-09 is a converged standard between the FASB and the International Accounting Standards Board (IASB) that provides a single comprehensive revenue recognition model for all contracts with customers across transactions and industries. The primary objective of ASU 2014-09 is revenue recognition that represents the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2017. Northern Trust is currently assessing the impact of adoption of ASU 2014-09.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). ASU 2016-01 requires equity investments (except those accounted for under the equity method or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income unless a policy election is made for investments without readily determinable fair values. Additionally, ASU 2016-01 requires public entities to use the exit price notion when measuring the fair value of financial instruments for measurement purposes and eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet. Furthermore, it requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 is effective for interim and annual periods beginning after December 15, 2017. Although Northern Trust is currently assessing the impact of ASU 2016-01, it is not expected to impact significantly Northern Trust’s consolidated financial position or results of operations.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (ASU 2016-02). ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet, with certain specified scope exceptions. Specifically within the lessee model under ASU 2016-02, a lessee is required to recognize in the statement of financial position a liability to make lease payments, known as the lease liability, and a right-of-use asset representing its right to use the underlying asset over the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. Northern Trust is currently assessing the impact of adoption of ASU 2016-02.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 significantly changes the way impairment of financial instruments is recognized by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of financial instruments. The main provisions of ASU 2016-13 include (1) replacing the “incurred loss” approach under current GAAP with an “expected loss” model for instruments measured at amortized cost, (2) requiring entities to record an allowance for available-for-sale debt securities rather than reduce the carrying amount of the investments, as is required by the other-than-temporary-impairment model under current GAAP, and (3) a simplified accounting model for purchased credit-impaired debt securities and loans. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. Northern Trust is currently assessing the impact of adoption of ASU 2016-13.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (ASU 2016-15). ASU 2016-15 provides specific guidance on eight cash flow classification issues, thereby reducing current and potential future diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017, although early adoption is permitted. Northern Trust is currently assessing the impact of adoption of ASU 2016-15.